TSINGTAO BREWERY COMPANY LIMITED (a Sino-foreign joint stock limited company established in the People s Republic of China)

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1 The Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. TSINGTAO BREWERY COMPANY LIMITED (a Sino-foreign joint stock limited company established in the People s Republic of China) (Stock Code: 168) ANNOUNCEMENT CONTINUING CONNECTED TRANSACTIONS WITH ASAHI BREWERIES AND ASAHI BEER (CHINA) On 27 January 2014, Shenzhen Tsingtao-Asahi entered into two 2014 Product Sales Agreements with Asahi Breweries and Asahi Beer (China) respectively, the terms of which are from 1 January 2014 to 31 December As Asahi Group Holdings is the substantial shareholder of the Company and its subsidiaries, Asahi Breweries and Asahi Beer (China), are associates of Asahi Group Holdings, Asahi Breweries and Asahi Beer (China) are connected persons of the Company. The transactions contemplated under the two 2014 Product Sales Agreements shall constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratios for the annual cap of the transactions contemplated under one of the 2014 Product Sales Agreements are higher than 0.1% but less than 5%, the transactions are subject to the reporting and announcement requirements, but exempted from the independent shareholders approval requirement under Chapter 14A of the Listing Rules. BACKGROUND Reference is made to the announcement of the Company dated 30 January 2013 regarding the continuing connected transactions entered into by Shenzhen Tsingtao-Asahi with Asahi Breweries and Asahi Beer (China) respectively under the two 2013 Product Sales Agreements. 1

2 On 27 January 2014, Shenzhen Tsingtao-Asahi entered into two 2014 Product Sales Agreements with Asahi Breweries and Asahi Beer (China) respectively, the terms of which are from 1 January 2014 to 31 December Particulars of the two 2014 Product Sales Agreements are set out below: PARTICULARS OF THE TWO 2014 PRODUCT SALES AGREEMENTS (i) The first 2014 Product Sales Agreement Date : 27 January 2014 Parties : Asahi Breweries as the purchaser Shenzhen Tsingtao-Asahi as the vendor Subject matter : Purchase of Asahi Beer Products by the purchaser from the vendor for sales outside the PRC, including Hong Kong and Taiwan (ii) The second 2014 Product Sales Agreement Date : 27 January 2014 Parties : Asahi Beer (China) as the purchaser Shenzhen Tsingtao-Asahi as the vendor Subject matter : Purchase of Asahi Beer Products by the purchaser from the vendor for sales within the PRC (iii) Material terms Term : 1 January 2014 to 31 December 2014 Conditions precedent Product price : The responsibilities and obligations of Shenzhen Tsingtao-Asahi under the two 2014 Product Sales Agreements shall be conditional upon the Company s compliance with the relevant requirements under the Listing Rules in relation to continuing connected transactions. : Pricing of the Asahi Beer Products shall be determined with reference to the following principle: (production costs + related fees + tax payment) (1 + not less than 10% profit) (1 + value added tax rate). 2

3 The relevant purchaser and the vendor shall confirm the purchase price payable to Shenzhen Tsingtao-Asahi with reference to the above pricing principle. Pursuant to the first 2014 Product Sales Agreement, the purchase price for the Asahi Beer Products purchased by Asahi Breweries during a month shall be settled by the 20th day of the following month. The purchase price shall be calculated in RMB and settled in US$. The benchmark exchange rate shall be US$1:RMB6.1. In the event of any changes in the market exchange rate at the end of a month by more than RMB0.2 as compared to the benchmark exchange rate, the unit purchase price shall be adjusted accordingly in the unit of RMB0.2 to maintain the value of the products before the changes in the market exchange rate. Asahi Breweries shall be obliged to pay the product price adjusted on the said basis from the following month. Pursuant to the second 2014 Product Sales Agreement, the purchase price for the Asahi Beer Products purchased by Asahi Beer (China) during a month shall be settled by the end of the following month. PROPOSED ANNUAL CAPS The annual caps of the continuing connected transactions contemplated under the two 2014 Product Sales Agreements are estimated to be follows: Annual caps for the year from 1 January 2014 to 31 December 2014 (Unit: RMB) The first 2014 Product Sales Agreement 31,031,121 The second 2014 Product Sales Agreement 12,548,319 The above annual caps are determined with reference to the volume of historical transactions of Asahi Beer Products, the expected demand and the production costs of the Asahi Beer Products under the two 2014 Product Sales Agreements, and the sales planning and actual operating circumstances of Shenzhen Tsingtao-Asahi. 3

4 REASONS AND BENEFITS OF ENTERING INTO THE TWO 2014 PRODUCT SALES AGREEMENTS The two 2014 Product Sales Agreements were entered into in the ordinary and usual course of businesses of the relevant parties. The transactions contemplated under the two 2014 Product Sales Agreements should fully utilize the existing production capacity of Shenzhen Tsingtao-Asahi and dilute the production cost, which will help to increase the utilisation rate and the income of the existing facilities of Shenzhen Tsingtao-Asahi. The Directors (including the independent non-executive Directors) are of the view that the transactions contemplated under the two 2014 Product Sales Agreements are on normal commercial terms, fair and reasonable, and in the interests of the Company and its shareholders as a whole. Other than Mr. Yasutaka SUGIURA, who is employed by Asahi Group Holdings and has abstained from voting on the relevant Board resolutions relating to the transactions, none of the Directors have a material interest in the transactions contemplated under the two 2014 Product Sales Agreements. LISTING RULES IMPLICATIONS As Asahi Group Holdings is the substantial shareholder of the Company and its subsidiaries, Asahi Breweries and Asahi Beer (China) are associates of Asahi Group Holdings, Asahi Breweries and Asahi Beer (China) are connected persons of the Company. The transactions contemplated under the two 2014 Product Sales Agreements shall constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratios for the annual cap of the transactions contemplated under one of the 2014 Product Sales Agreements are higher than 0.1% but less than 5%, the transactions are subject to the reporting and announcement requirements, but exempted from the independent shareholders approval requirement under Chapter 14A of the Listing Rules. GENERAL The Group is principally engaged in the production and sales of brewery products and related business. The principal businesses of Asahi Breweries are production, processing and sales of beer and manufacturing and sale of the related machinery and facilities. The principal businesses of Asahi Beer (China) are to manage the investments of Asahi Breweries in the PRC, and provide related services (including the sale of products from the invested enterprises). 4

5 DEFINITIONS In this announcement, the following expressions have the following respective meanings set adjacent below, unless the context requires otherwise: 2013 Product Sales Agreements 2014 Product Sales Agreements Asahi Beer (China) Asahi Beer Products Asahi Breweries Asahi Group Holdings associate Board Company connected person Directors Hong Kong Stock Exchange two product sales agreements in relation to the sale and purchase of Asahi Beer Products entered into by Shenzhen Tsingtao-Asahi with Asahi Breweries and Asahi Beer (China) respectively on 30 January 2013 two product sales agreements in relation to the sale and purchase of Asahi Beer Products entered into by Shenzhen Tsingtao-Asahi with Asahi Breweries and Asahi Beer (China) respectively on 27 January 2014, particulars of which are set out in this announcement Asahi Beer (China) Investing Co., Ltd., a wholly-owned subsidiary of Asahi Group Holdings the beer products under the Asahi brand produced by Shenzhen Tsingtao-Asahi Asahi Breweries, Ltd. a subsidiary of Asahi Group Holdings Asahi Group Holdings, Ltd., a company incorporated in Tokyo, Japan, the shares of which are listed on the Tokyo Stock Exchange and the Osaka Stock Exchange and a substantial shareholder of the Company has the meaning as ascribed to it under the Listing Rules the board of Directors Tsingtao Brewery Company Limited, a Sino-foreign joint stock limited company established in the PRC, the shares of which are listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange has the meaning as ascribed to it under the Listing Rules the directors of the Company The Stock Exchange of Hong Kong Limited 5

6 Listing Rules PRC RMB Shenzhen Tsingtao-Asahi substantial shareholder US$ the Rules Governing the Listing of Securities on the Stock Exchange the People s Republic of China, and does not include Hong Kong, Macau Special Administrative Region of the PRC and Taiwan in this announcement Renminbi, the lawful currency of the PRC Shenzhen Tsingtao-Asahi Company Limited*, a Sino-foreign equity joint venture established in Shenzhen, Guangdong Province, the PRC and a company owned as to 51% by the Company as at the date of this announcement and a subsidiary of the Company has the meaning as ascribed to it under the Listing Rules United States dollars, the lawful currency of the United States of America % per cent. * for identification purpose only By order of the Board Tsingtao Brewery Company Limited Zhang Xue Ju Zhang Rui Xiang Joint Company Secretaries Qingdao, the PRC 27 January 2014 As at the date of this announcement, the Board comprises: Executive Directors: Non-executive Directors: Independent non-executive Directors: Mr. SUN Ming Bo (Chairman), Mr. WANG Fan (Vice Chairman), Mr. HUANG Ke Xing, Ms. JIANG Hong and Mr. SUN Yu Guo Mr. Yasutaka SUGIURA and Mr. CHEN Zhi Cheng Mr. WANG Xue Zheng, Mr. ZHAO Chang Wen, Mr. WU Xiao Bo and Mr. MA Hai Tao 6